Court of Appeal Summaries (January 19-23, 2015)

Hello again, everyone. Below are summaries for this week’s Ontario Court of Appeal civil decisions (non-criminal). Noteworthy topics include conflict of laws, charging orders under the Solicitors Act, limitation periods, spousal support, construction liens, administrative dismissal for delay, corroborative evidence, and set-offs in the context of bankruptcy and insolvency.

Wishing everyone a nice weekend.

John Polyzogopoulos
Blaney McMurtry LLP
jpolyzogopoulos@blaney.com
Tel: 416.593.2953
http://www.blaney.com/lawyers/john-polyzogopoulos

Ibrahim v. Robinson, 2015 ONCA 21

[Weiler, Feldman and Benotto JJ.A.]

Counsel:
B. Chambers, for the appellant
M. Greenaway, for the respondents

Keywords: Civil Procedure, Motor Vehicle Accident, Jurisdiction, Forum of Necessity, Van Breda v. Village Resorts Limited, West Van Inc. v. Daisley

Facts: This is an appeal from the order of Justice Steven Rogin of the Superior Court of Justice, dated February 21, 2014.  The appellant is the defendant in an MVA action commenced in Windsor, Ontario.  The accident occurred on January 7, 2008, in Michigan. Following the expiry of the three-year limitation period in Michigan, the appellant brought a motion to dismiss the Ontario action for want of jurisdiction.  The motion judge did not dismiss the action, relying on the forum of necessity exception referred to by the Court of Appeal in Van Breda v. Village Resorts Limited, 2010 ONCA 84, 98 O.R. (3d) 721.  The motion judge accepted that under the test for assuming jurisdiction as it existed before the Supreme Court’s decision in Van Breda and when this action was commenced, there may well have been sufficient connecting factors to Ontario for an Ontario court to assume jurisdiction.  He found that, because the appellant delayed serving the jurisdiction motion until it was too late for the respondents to sue in Michigan, the appellant effectively denied the respondents access to the Michigan courts and may have lulled them into a false sense of security.  He concluded that fairness and access to justice for the plaintiffs called for the court to assume jurisdiction based on the forum of necessity exception.  The appellant brought a subsequent motion before the same motion judge seeking to introduce further evidence of correspondence and emails to try to demonstrate that the respondents were not misled about the appellant’s intention to challenge jurisdiction. The motion judge endorsed the record that the new evidence was available on the original motion and the appellant’s only remedy was to appeal.  The appellant appealed these orders.

Issues:
(1) Did the motion judge err in assuming jurisdiction over this action?
(2) Did the motion judge err in refusing to admit the fresh evidence?

Holding: Appeal dismissed.

Reasoning:
(1) No. To interfere with the motion judge’s discretionary decision in this case, the Court would have had to be satisfied that the motion judge misdirected himself, gave no or insufficient weight to relevant considerations, or came to a decision that is so clearly wrong that it amounts to an injustice.  The motion judge’s decision did not meet this threshold.  The Court noted that had the motion judge treated the expiry of the Michigan limitation period as a sufficient condition for invoking the doctrine of necessity, then this court’s comments in West Van Inc. v. Daisley, 2014 ONCA 232, 119 O.R. (3d) 481 — that the expiry of the limitation period in the proper foreign forum does not make Ontario the forum of necessity — would speak strongly in favour of allowing the appeal.  However, in this case, the expired limitation period was not the only basis for the motion judge’s exercise of his residual discretion to assume jurisdiction.  He also based his decision on considerations of fairness and access to justice, including the fact that the change in the common law test for assumed jurisdiction occurred only after the expiry of the foreign limitation period.

In addition, the motion judge took into consideration the appellant’s unexplained lengthy delay in bringing the jurisdiction motion until after the Michigan limitation period had expired, which may have lulled the plaintiffs into a false sense of security about the jurisdiction issue.  Given the additional factors that influenced the motion judge’s decision, that decision is not inconsistent with the Court’s comments in West Van, and should be accorded deference.

(2) The Court saw no basis to interfere with the motion judge’s decision on the second motion not to admit the proposed fresh evidence on the basis that it was all available at the time of the original motion. The proposed fresh evidence would not have assisted the appellant.

Karrys v. Karrys, 2015 ONCA 17

[Doherty, Juriansz and Huscroft JJ.A.]

Counsel:
R. G. Schipper, for the appellant Torkin Manes LLP
P. J. Karrys, acting in person
D. C. Moore, for the respondent, Karrys Bros., Limited

Keywords: Civil Litigation, Solicitors Act, ss 34(1), Charging order

Facts:  The appellant (a firm of solicitors) appealed an order of the motion judge declaring certain payments to be made to the respondent pursuant to a settlement agreement were not subject to three charging orders that were in the solicitors’ favour. The three charging orders were granted to the appellant for the work it had done in 2004, representing the respondent in three proceedings in connection with shareholder dispute with his cousin. These three proceedings and the larger dispute remained unresolved when the respondent terminated the appellant’s retainer in October 2007.

In January 2009, the appellant obtained the charging orders on consent, which gave it a first charge on any proceeds of settlement or any proceeds after judgment payable to the respondent “in respect of” matters on which the appellant had represented him. The respondent terminated the appellant’s retainer, yet continued the dispute with his cousin and commenced additional lawsuits. In February 2014, the respondent and his cousin entered into a settlement that resolved all lawsuits and legal proceedings between them, as well as matters involving third parties. The settlement agreement contemplated immediate and future payments to the respondent.

The dispute at hand revolved around whether the charging orders applied to these payments. The motion judge granted the respondent’s motion for a declaration that the appellant was not entitled to these disputed payments. The motion judge observed that a solicitor must demonstrate the property was recovered or preserved through his or her instrumentality to obtain a charging order on property. The motion judge held that although the settlement agreement dealt in part with proceedings on which the appellant had acted, the disputed payments arose out of the settlement of the subsequent litigation; therefore, the disputed payments were not subject to the charging orders. The appellant argued that the motion judge failed to recognize that charging orders should be given a broad and expansive scope.

Issue:  Did the motion judge err in finding that the disputed payments were not subject to the charging orders?

Holding:  Appeal dismissed.

Reasoning:  The record before the motion judge provided ample support for his conclusions. He considered the parties involved in the proceedings, the subject matter, the time at which the proceedings were launched and when the subject events took place. The motion judge found there was no link between the disputed payments and the appellant’s work. The Court was not persuaded to interfere with the motion judge’s conclusion.

O’Dowda v Halpenny, 2015 ONCA 22

[Weiler, Feldman and Benotto JJ.A]

Counsel:
S. Dewart, for the appellants.
J. Stirton, for the respondents.

Keywords: Civil Litigation, Negligence, Negligent Design, Summary Judgment, Limitation Periods, Limitations Act, 2002

Facts: The appellants purchased a house from the Halpennys in 2003 and discovered structural problems shortly thereafter.  They retained experts in the fall of 2003 and the Phase 1 report was delivered in May 2004.  It identified some problems and recommended further investigation.  The appellants commenced an action against the vendors, their realtor, two real estate agents and the city of London.  A Phase II report identified further problems and was dated February 28, 2005.  Examinations for Discovery were held March 2006, and one of the defendants testified that the respondents had designed the house and prepared working drawings.  On December 19, 2006 the appellants moved to amend their claim to add the respondents as defendants.  The respondents moved for summary judgment on the basis that the action against them was statute-barred because they were added more than two years after the cause of action arose.  The motions judge granted summary judgment concluding that the appellants knew or should have known that the negligent design of the house created a condition of danger upon reviewing the Phase 1 report, and they should have known the respondents designed the home when they received plans stamped with that information in May 2003.

Issue: Did the motions judge err in granting summary judgment dismissing the appellants’ claim against the respondents on the basis that it was barred by the 2-year limitation period under the Limitations Act, 2002?

Holding:  Appeal allowed, summary judgment set aside.

Reasoning: Yes.  The court held that a subsequent purchaser of a building has an action in tort against the designers and constructors of the building for defects that pose a substantial threat to health and safety.  A plaintiff must have known or ought to have known that the construction problems or defects pose a substantial danger to health and safety before the limitation period begins to run.  The court found that the motions judge determined the appellants should have known the defects created a danger based on his own reading of the Phase 1 report and failed to avert to the sworn evidence filed on the motion, an affidavit by the appellants’ lawyer stating that the Phase II report was the first information suggesting the house may be dangerous by design.  The court held it was an error of law for the motions judge to ignore the uncontested sworn evidence on the central matter in issue without providing reasons for doing so and held the order for summary judgment had to be set aside.  As the parties did not ask the motions judge to determine the issue of when the dangerousness of the structure was known, the limitation issue was a genuine issue for trial.

Djekic v. Zai, 2015 ONCA 25

[Weiler, Sharpe and Blair JJ.A.]

Counsel:
S.J. Lubczuk and K.E. Quinlan, for the appellant and respondent on the cross-appeal
W. Zai, acting in person

Keywords: Family Law, Spousal Support, Duration, Spousal Support Advisory Guidelines, Property Claims, Constructive Trust, Equitable Trust, Security

Facts: The appellant Djekic appealed the decision of Reilly J., who ordered the respondent Zai to pay Djekic spousal support for a limited duration of six years, as well as $100,000, representing her equitable interest in the house in which they cohabited before their separation. Djekic also appeals Reilly J.’s decision on the basis that he erred in failing to provide her security for the $100,000 payment, and in failing to grant pre-judgment interest on this award. Zai cross-appealed for a reconciliation of amounts he claimed he paid on behalf of Djekic, towards lines of credit on real estate investments he was jointly involved in with Djekic.

Issues:
(1) Did Reilly J. err in granting spousal support to Djekic for a limited duration of six years, rather than on an indeterminate basis?
(2) Did Reilly J. err in failing to order that Djekic had a constructive trust interest in her house of cohabitation, equivalent to one-half of the value of the house at the time of trial?
(3) Did Reilly J. err in failing to provide Djekic with security for the $100,000 payment for her equitable interest in the house, and failing to award her pre-judgment interest on this award?
(4) Did Reilly J. err in failing to considering Zai’s claim for a reconciliation of amounts paid on Djekic’s behalf?

Holding:  Djekic’s appeal was allowed only with respect to the length of the spousal support award, as well as the security for her equitable interest in the house and the respective pre-judgment interest on that award. Zia’s cross-appeal was dismissed. Djekic was awarded costs fixed at $9,500, representing her costs of this appeal.

Reasoning:
(1) Yes. Reilly J. erred in determining that the spousal support award should be limited to a period of six years.  He failed to consider the Spousal Support Advisory Guidelines (“SSAG”), which suggest that where the recipient’s age plus the duration of the relationship are greater that 65 – as is the case with Djekic – an indefinite award is appropriate.  While the case of Fisher v. Fisher (2008), 88 O.R. (3d) 241 (C.A.) provides that a judge may depart from the SSAG, he or she should provide reasons for doing so.  In this case, Reilly J. did not provide any reasons for this departure, and he also failed to consider Djekic’s age in the context of the SSAG, as well as the fact that she is disabled and on a small pension.  The spousal support award of $950 per month, payable from the time of trial, was not varied.  However, the Court of Appeal varied the duration of the award to an indeterminate time period, payable in accordance with the SSAG.

(2) No. Reilly J. did not err in principle in his findings that Djekic had met the test for a finding of constructive trust based on unjust enrichment, and that the value of her equitable interest in her house of cohabitation was $100,000.  Djekic argued on appeal that Reilly J. failed to hold that she was engaged with Zia in a joint family venture, entitling her to receive one-half of the value of the equity in their house, as of the time of trial.  Her argument was not successful, as it was not raised at trial, and because it was not supported by the record.  In considering the value of Djekic’s equitable interest, Reilly J. reviewed the record and found that while she had contributed towards the down payment when the house of cohabitation was purchased, Zia later repaid her for this contribution.  Afterwards it was not possible to track where that money went.  In sum, Reilly J. reviewed all relevant evidence and reached a result that was fair and reasonable.

(3) Yes. Reilly J. erred in principle in both respects.  Since Zai retains title to and ownership of their house of cohabitation and controls its potential sale, Djekic is entitled to a charge on the property to secure payment of $100,000 plus interest.  Furthermore, pursuant to the Courts of Justice Act, Djekic is entitled to pre-judgment interest on her $100,000 award, from the date of separation from Zia, as well as post-judgment interest.

(4) No. Reilly J. did not err in failing to explicitly consider Zia’s claim for reconciliation.  Reilly J. implicitly and fairly considered this claim when he reviewed evidence of competing financial claims between the parties and then valued Djekic’s equitable interest in the house at $100,000.

MDM Plastics Limited v Vincor International Inc., 2015 ONCA 28

[Feldman, Watt and van Rensburg JJ.A.]

Counsel:
S. Irving and G. Grove, for the appellant
L. Sigal, for the respondent

Keywords: Civil Procedure, Administrative Dismissal For Delay, Rule 48.14, Reid v Dow Corning Corp. (2002), 48 C.P.C. (5th) 93 (Ont. Div. Ct.), Wellwood v Ontario Provincial Police, 2010 ONCA 386

Facts: The respondent, MDM Plastics Limited (the plaintiff), commenced an action against the appellant, Vincor International Inc. (the defendant), in February 2009 concerning events alleged to have taken place in 2006 and 2007. The plaintiff alleged breach of an agreement for the long-term supply of polyethylene terephthalate bottles. The agreement and breach were denied by the defendant in its statement of defence.

In July 2011, the registrar dismissed the plaintiff’s action for delay pursuant to subrule 48.14(4) of the Rules of Civil Procedure. The plaintiff promptly sought and received the defendant’s consent to set aside the dismissal order.

Several months later, the registrar again ordered that the plaintiff’s action be dismissed for delay. This time, the defendant refused to consent to setting aside the order and the plaintiff promptly brought a motion to set it aside. Master Glustein refused to set aside the dismissal order. The plaintiff appealed to the Divisional Court. Lederer J., sitting as a single judge of the Divisional Court, reversed Master Glustein’s order and permitted the action to continue. The defendant appealed Lederer J.’s order with leave.

Holding: Appeal dismissed.

Reasoning: The appeal turned on the proper application of the fourth factor from Reid v Dow Corning Corp. (2002), 48 C.P.C. (5th) 93 (Ont. Div. Ct.) – the absence of prejudice to the defendant.

The issue of prejudice is a key consideration. While an action may be dismissed even in the absence of prejudice, in most cases, the question of prejudice figures largely in determining whether to set aside a dismissal for delay. The prejudice that the motion judge or master must consider is to the defendant’s ability to defend the action that would arise from steps taken following dismissal, or which would result from restoration of the action following the registrar’s dismissal. Further, judges and masters must balance this prejudice to the defendant against the prejudice to the plaintiff from having the case dismissed. The principle of finality is also relevant, and can “trump” as in Wellwood v Ontario Provincial Police, 2010 ONCA 386.

In the present case, the master proceeded on erroneous legal principles in reaching his conclusion. The balancing of the Reid factors favoured the order made by the Divisional Court judge setting aside the dismissal. Plaintiff’s counsel did not receive the second status notice, upon the second dismissal order counsel moved promptly to set it aside, and the actions of the defendant’s counsel did not support actual prejudice or reliance on finality.

The master erred in two respects. First, the master erred in interpreting the majority’s decision in Wellwood as establishing that the presumption of prejudice which arises from the passage of time and the expiry of a limitation period can only be rebutted if the plaintiff adduces affirmative evidence. In evaluating the strength of the presumption of prejudice, the master or motion judge must consider all of the circumstances, including the defendant’s conduct in the litigation. The court must consider whether the defendant’s actions are consistent with a finding of prejudice.

In this case, the defendant consented without conditions to setting aside the first dismissal order less than six months before the second dismissal order was made. The fact that the defendant consented to set aside the first dismissal without conditions suggests that there was no actual prejudice to its ability to defend the action at that point as a result of the delay or the dismissal. Furthermore, the defendant’s willingness to discuss settlement after consenting to setting aside the first dismissal order, is inconsistent with a presumption of prejudice arising from the delay in prosecuting the action or from the expiry of the limitation period.

Second, the master erred in failing to consider that the interest in finality, which was central to the holding in Wellwood, had no application in the present case. In this case, the finality principle was not engaged. The defendant could not be said to have gained any security of legal position through the first dismissal order given that the plaintiff immediately made it known to the defendant that it wished to have the order set aside and promptly brought the motion to set aside the dismissal.

Finally, the nature of the action as revealed by the pleadings may be considered as part of the overall context in the exercise of the court’s discretion in motions of this type.

Trobradovic v. Izzo, 2015 ONCA 32

[Weiler, Feldman and Benotto JJ.A.]

Counsel:
D. Saverino, for the appellant
G. Gryguc, for the respondents

Keywords: Real Property, Construction Liens, Mortgages

Facts: The appellant mortgagor appeals the judgment granting the respondent mortgagees $876,797.55 for funds owed under a mortgage agreement.

Issue: Did the motion judge err by granting judgment instead of directing an accounting because the appellant contested the amounts owing?

Holding:  Appeal dismissed.

Reasoning:  No error in the approach of the motion judge was found on appeal. The motion judge had evidence before him to substantiate the claims of the respondents.

The motion judge concluded that the appellant had the information available to him to verify the amounts owing, and the failure to provide this represented a delay tactic instead of a substantive objection. Adjournments had been granted to the appellant on more than one occasion.

The court also found it significant that the motion judge was advised by prior counsel for the appellant that the matter had been resolved, subject to a final determination of the amount of the construction liens. These amounts are readily determined as a matter of public record.

On the evidence, it was open to the appellant to establish the amount owing. To the extent that there was an arithmetical error, if any, the proper approach would have been to return to the motion judge for directions.

Gyorffy v. Drury, 2015 ONCA 31

[Laskin, Rouleau and Epstein JJ.A.]

Counsel:
A.L. Rachlin, for the appellant
T.H. Leigh-Bell, for the respondent
B.M. Cameron and M. Han, for the intervener Ontario Trial Lawyers Association

Keywords:   Civil Litigation, Motor Vehicle Accidents, Impairment Threshold, Corroborative Evidence

Facts: Prior to the jury in a motor vehicle action rendering its verdict, the defendant successfully brought a threshold motion. The trial judge held that the plaintiff met the impairment threshold and satisfied all evidentiary requirements except one: the plaintiff had not provided evidence corroborating his change in function, as required under subsection 4.3(5) of the Court Proceedings for Automobile Accidents that Occur on or After November 1, 1996, a regulation under the Insurance Act (the “regulation”). The plaintiff, and no one else, testified about the plaintiff’s pre- and post-accident condition. The trial judge dismissed the action on this basis.

The majority of the Divisional Court allowed the plaintiff’s appeal, holding that subsection 4.3(5) of the regulation requires the evidence of a physician, plus the evidence of one other witness. Because the wording of subsection 4.3(5) does not expressly preclude a plaintiff from giving corroborating evidence, the majority held that the plaintiff could be that other witness. The majority further held that the trial judge’s interpretation of subsection 4.3(5) of the regulation was contrary to the values and principles of equality set out in section 15 of the Canadian Charter of Rights and Freedoms (“Charter”). Justice Matlow, in dissent, held that “as a matter of logic, [the plaintiff’s] evidence was not capable of corroborating his own evidence.”

The defendant appeals on the basis that the Divisional Court’s interpretation of subsection 4.3(5) of the regulation renders the corroboration requirement irrelevant. The defendant submits that corroborating evidence must be evidence from a source independent of the witness whose evidence requires corroboration. As the physician’s evidence is invariably based on facts the plaintiff relates to the physician, the corroboration required by subsection 4.3(5) cannot also come from the plaintiff.

Issue:   Can the plaintiff provide the corroborating evidence required under subsection 4.3(5) of the regulation?

Holding: Appeal dismissed.

Reasoning:  Yes. The majority’s interpretation of subsection 4.3(5) of the regulation was correct.

First, the opening words of subsection 4.3(5), “In addition to the evidence of the physician” mean that the witness whose evidence is to be corroborated is the physician, not the plaintiff. The “material fact” to be corroborated is the injured person’s change in function. Implicitly, if not explicitly, the physician’s conclusion under s. 4.3(4) that the impairment is “sustained as the result of the use or operation of an automobile” is a conclusion about the injured person’s change in function from before to after the accident.

Second, subsection 4.3(5) does not expressly exclude the plaintiff from being the corroborating witness. That other evidence may come from the plaintiff, a family member, an employer or co-worker, another lay person, or even from surveillance or medical records. The provision does not exclude anyone or anything. Certainly, the Lieutenant Governor-in-Council could have precluded a plaintiff or anyone else from providing the necessary corroborating evidence. But it chose not to do so.

Third, the court did not accept the defendant’s contention that the plaintiff cannot be the source of corroborating evidence because the physician’s opinion typically relies on hearsay evidence from the plaintiff about the plaintiff’s pre- and post-accident condition. In many cases, the physician will have direct knowledge of the plaintiff’s change in function and will not have to rely on the plaintiff’s account. In others, the change in function may be obvious from the nature of the injury, or the physician may be able to discern the change in function from an MRI, rehabilitation records or a physical examination. In other cases – for example, some cases of chronic pain – the physician will have little or no independent knowledge of the plaintiff’s change in function, and will be relying largely or entirely on the plaintiff’s account. Nonetheless, the trial judge will be able to assess the plaintiff’s evidence and determine whether it corroborates that of the physician. But the focus in subsection 4.3(5) is on whether the evidence is truly corroborative, not on a particular category of corroborating witness.

The court felt it unnecessary to consider section 15 of the Charter in interpreting subsection 4.3(5).

Agaki v Synergy Group (2000) Inc., 2015 ONCA 44

[Hoy A.C.J.O., van Rensburg and Brown JJ.A]

Counsel:
J.M. Sereda, for the appellants
T. Corsianos, for the respondent

Keywords: Civil Litigation, Notice, Service, Actual Knowledge of Proceedings

Facts: The appellants are appealing from a judgment granted on April 24, 2013, at an undefended trial. They argue that they were not properly served with notice of two proceedings leading up to the trial judgment, namely the orders of Roberts J on October 5, 2012 and January 18, 2013.

Issue: Should the trial judgment be set aside?

Holding: Appeal dismissed. Costs to the respondent in the amount of $8,475, inclusive of HST and disbursements.

Reasoning: The court found that the appellants took no steps to move to set aside the orders on the basis that they lacked proper notice. There was no evidence that the appellants lacked knowledge of the proceedings. The appellants’ counsel, Mr. Sereda, had correspondence with opposing counsel on October 25, 2012, in which he confirmed awareness of the October 5, 2012 order. The court also found that the appellants knew about the January 18, 2013 order as an agent appeared for them that day requesting the adjournment be denied. The court held that it was not the law that an order made without notice is a nullity, an order is nonetheless an order of the court until it is set aside. Here there was no evidence to support the conclusion that the appellants lacked knowledge of the proceedings leading up to the uncontested hearing.

BDO Dunwoody Limited as Receiver for Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33

[Strathy C.J.O., Rouleau and Hourigan JJ.A.]

Counsel:
M. Simaan for the appellant
J. Teskey and G. White, for the respondent

Keywords: Commercial Litigation, Contract Interpretation, Factual Matrix, Sattva Capital Corp. v. Creston Moly Corp., Set-off, Calculation of Damages, Costs

Facts:  The principal issue on the appeal was the interpretation of the Master Supply Agreement (“MSA”) between Wesbell Networks Inc. (“Wesbell”) and the respondent, whereby Wesbell agreed to build and run a Voice over Internet Protocol (“VoIP”) for the respondent. The appellant, BDO Dunwoody (the receiver over Wesbell’s assets), submitted that the trial judge failed to give effect to the parties’ intentions in interpreting the MSA. Wesbell leased the equipment used to construct the VoIP system from a third party and the respondent guaranteed Wesbell’s performance of the lease by way of a “put” agreement, where the respondent would assume the lease if Wesbell defaulted.

The respondent owed Wesbell approximately $3.5 million at the end of the third year of the MSA. It gave notice to Wesbell and renewed the lease for an optional fourth year. Wesbell issued an invoice for the amount the respondent owed and four days later Wesbell declared itself insolvent and made an assignment in bankruptcy. The respondent exercised its contractual right to terminate the MSA for material breach. As per the MSA, the respondent assumed Wesbell’s rights and obligations under the lease and paid the lessor approximately $2 million (the amount owed under the lease for the remainder of the term). The appellant sued the respondent for the $3.5 million owed to Wesbell.  In its defence of the claim brought by the appellant, the respondent sought to set-off the $2 million against the amount it owed to Wesbell.

The trial judge acknowledged that she was required to consider the factual matrix of the MSA. However, she declined to consider the parties’ subjective intentions in interpreting the MSA. The trial judge held that at the time of Wesbell’s default under the lease, it was obliged to pay the lessor liquidated damages in an amount equal to the balance owing for the remaining term of the lease. The amount paid by the respondent to the lessor was a discharge of its outstanding obligation and Wesbell was required to indemnify the respondent for this payment. Therefore, a contractual right of set-off was available to the respondent. The trial judge concluded that if the contractual set-off was not available, then both legal set-off and equitable set-off were available.

If Wesbell had not committed a material breach of the contract, it would have been entitled to terminate the MSA after the fourth year and the respondent would have been required to assume the remaining term of the lease. As per Hamilton v. Open Window Bakery, the appellant relied on the principle that where a defendant who wrongly repudiated a contract had alternative modes of performance, the mode to be adopted in calculating damages would be one  that was least profitable to the plaintiff and most favourable to the defaulting defendant.

Furthermore, the trial judge held that neither party should have received costs because there was divided success at trial. She held that both parties were “either equally successful, or equally unsuccessful”.

Issues:
(1) Was the trial judge’s interpretation of the MSA reasonable and was that interpretation entitled to deference?
(2) Should the respondent’s damages have been limited to one year of lease payments?
(3) Did the trial judge err in not providing a costs award to the appellant? 

Holding: Appeal allowed on the issue of costs but otherwise dismissed.

Reasoning:
(1) Yes.  The decision of Sattva Capital Corp. v. Creston Moly Corp., made it clear that “contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.” As per Martenfeld v. Collins Barrow Toronto LLP, contractual interpretation will be subject to a deferential standard of review. The trial judge was alive to the contractual matrix and made detailed factual findings with respect the formation of the MSA, its performance and its breach. She was correct in finding that the parties’ subjective intentions were irrelevant to the construction of the agreement.

(2) No.  The appellant’s reliance on the principle derived from Hamilton v. Open Window Bakery regarding the calculation of damages was misplaced. The current case was not one of alternative methods of calculating damages. When Wesbell made its voluntary assignment to bankruptcy, it became liable to the lessor for the full amount of the remaining lease payments. Wesbell was required to indemnify the respondent for that amount.

(3) Yes.  The trial judge erred in focusing on individual issues and disregarding the overall success achieved by Wesbell. The general rule is that, absent exceptional circumstances, a successful party is entitled to its costs of a proceeding. There was nothing identified by the trial judge or by the Court that this case justified a departure from the general rule. Therefore, costs of the trial were fixed at $94,000 in favour of the appellant.  The respondent received costs of the appeal of $20,000 because it was successful on the appeal, except on the issue of the costs of the trial.

Hedican v Hedican, 2015 ONCA 43

[Feldman, Cronk and Hourigan JJ.A]

Counsel:
W. Hedican, appearing in person
M.J. Holervich, for the respondent
J. Hedican, on his own behalf

Keywords: Estates, Settlement

Facts: The appellant agreed to the terms of settlement before Fitzpatrick J. in December 2013 and again affirmed that settlement before Fitzpatrick J. in July 2014. That settlement was incorporated into the order being appealed.

Issue: Should the order be varied or set aside?

Holding: Appeal dismissed.

Reasoning: No. The appellant agreed to the terms of settlement and there did not appear to be anything unconscionable about the agreement. There was no basis to interfere with the order.

Neophytou v. Fraser,  2015 ONCA 45 

[Hoy A.C.J.O., van Rensburg and Brown JJ.A.]

Counsel:
F. Hindi and L. Krainyk, for the appellant
J.F. Diamond, for the respondent

Keywords: Civil Litigation, Action to Recover Debt, Jurisdiction Simpliciter, Club Resorts Ltd. v. Van Breda, Contract Made Where Communication of Acceptance of Offer Was Received

Facts: The appellant appeals the decision of Theodore J., who dismissed her motion to dismiss or stay the action for lack of jurisdiction. The appellant is the defendant to an action on a debt, and the respondent is the plaintiff who has brought an action to collect this debt. The appellant is a resident of the United States, and the respondent is a resident of Ontario.

Issue: Did Theodore J. err in concluding that Ontario had jurisdiction simpliciter to hear this action?

Holding: The appeal was dismissed and costs of $8,000 were awarded to the respondent.

Reasoning:  No. While Theodore J. failed to identify any relevant presumptive connecting factor connecting this action to Ontario, as established in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, the evidence demonstrated that a contract connected with this dispute was made in Ontario. Specifically, the respondent had discussions with the plaintiff in the United States about a possible loan, however the respondent ultimately discussed the terms of the loan and entered into an agreement with the appellant, over the phone, while the respondent was located in Ontario. Since the respondent is the offeror and received the appellant’s confirmation of acceptance of the loan agreement in Ontario, the relevant contract was made in Ontario. This is a presumptive connecting factor recognized in Van Breda. Furthermore, the appellant has not rebutted the presumption of jurisdiction arising from this presumptive connecting factor, as set out in Van Breda. Therefore, Theodore J. did not err in finding that Ontario had jurisdiction to hear this action.

The information contained in our summaries of the decisions is not intended to provide legal advice and does not necessarily cover every matter raised in a decision. For complete information or for specific advice, please read the decision or contact us.

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